A New Type of Tech Leader: The CDO
Gary Scholten is the EVP and CIO of Principal Financial Group. But that’s not all. He recently took on the role of Chief Digital Officer and in this interview, he discusses what that means and how he’s leading both digital and business strategies
Gary Scholten (Twitter, LinkedIn) has been with Principal Financial Group since 1980 — which in today’s gig economy is almost unheard of. But Gary has grown with Principal and has helped the company usher in a number of digital and technical innovations that serve customers, shareholders, employees and everyone in between.
In this interview, Gary explains his many titles at Principal, which include executive vice president, chief innovation officer, and most recently chief digital officer, and he defines what it means to be a CDO today. It’s a role he’s excited about taking on, and he believes that through that role, he will be able to combine the business strategy and digital strategy in a way that will enable top to bottom success for Principal and its customers.
Topics Discussed: AI, machine learning, applications, mobile, hiring, digital strategy, IT, business strategy, CIOs, CDOs.
Introducing Gary — (1:25)
- The shelf life of a CIO is about five years, but Gary has been with the same company and in the same position for quite a while.
- “I’ve always been inquisitive and I’ve always had the opportunity to go on and do different things.”
The scope of Gary’s responsibilities — (2:45)
- Principal is a global business and as CIO he is responsible for overseeing technology across all of the subsets of the global business.
- As the chief digital officer, Gary considers himself more involved in strategy.
- Helps drive technology deeper into business strategies.
- Gary helped found an off-shore operation which does high-end knowledge work, transitional transaction processing and IT, and he’s chaired that for 13.
- Gary also did HR for a number of years.
How HR and IT are linked — (5:10)
- Every department is so built around technology, including on-boarding, payment and employee systems.
- Gary spent time figuring out if their current workforce was fitting into where the company wanted to go in terms of digital strategies.
- The attributes Gary was looking for in candidates were those who were comfortable using data and on the analytical side of things coming up with hypotheses and using data to prove or disprove those.
- It was about putting business people and IT people together to begin to understand the changing needs of the customer.
The war for talent — (9:05)
- Principal has a unique ability to attract talent, even in Iowa, not necessarily considered the tech mecca, but that could be changing.
- Des Moines is actually being named in the top 5 and 10 on some lists of up and coming tech centers.
Working between the product and business side of the organization — (11:20)
- “I think it’s critical that technology and the IT areas of business are not separate at all. They should be fully integrated.”
- You have to listen to your customers, you have to use data so you can watch how they’re trying to use the digital tools and then work together to design solutions.
- You’re not just designing products, you’re always coming up with solutions.
What products has Gary worked on? — (12:35)
- “I believe in our mission to help people live their best lives through financial security, and I think technology is a critical piece of that.”
- Principal uses behavioral economics to find the best way to serve customers.
The tools Principal uses to aid customers — (15:10)
- Applying machine learning gradually
- Use a program called Easy Elect which makes a personalized experience for customers using data Principal gathers.
- When designing systems to help clients make decisions, Gary says that the amount of data you gather is critical, but it has to be the right kind of data and there are limits to what people want/need/expect to be asked in order to make the process work for them, but not be too intrusive — “We’re trying to thread the needle between as simple as possible, transparent, compliant and it has to guide them.”
What it means to be a CDO and embracing a strategic role — (18:50)
- There’s so much change going on and companies are trying to adapt. The forward-thinking companies are taking a different approach than relegating technology to the back burner.
- “I think this is a part of where CIOs in the future are going… to really be considered a business strategist and to make sure that technology is driven deeper and deeper into their business and business strategies.”
- Identifying offensive versus defensive digital strategies, creating enterprise strategies and serving shareholders by accelerating the digital strategy are all part of Gary’s job as CDO.
- “Everybody needs to be developing themselves to be a part of the workforce of the future, where technology is a central part of our strategy.”
The times there has been pushback — (24:55)
- The biggest issue is not convincing businesses or partners what direction to go in with their digital strategy, what causes problems is often the pace of change.
What is being done internally to drive innovation — (26:50)
- Principal does “Code Jams,” which is their version of a hackathon.
- There are innovation labs in every business that work on ideas and proof of concept implementations.
- “We try to fail fast and move on.”
- A lot of their innovation come out of their labs in India and they are beginning to work with start-ups through various accelerators.
The future of mobile — (31:25)
- There are applications across the board of Principal’s business and they are committed to meeting their customers where they are. Because more and more of their customers are in the millennial generation, which is dependent on mobile, Principal is working to serve them through mobile capabilities.
- Principal Lifestyle is one of their mobile apps and helps provide life insurance information and guidance that’s tied into a person’s every day activities, diet, exercise, etc. There is a gamification element that provides prizes as well.
- There is definitely a future that connects with fitness trackers and other tools, each of which are becoming more standardized.
The AI and machine learning projects currently in the pipeline— (34:05)
- “There’s going to be more AI built into things that we’re buying as opposed to building things from scratch.”
- On the investment management side, there has been a global research platform for 20 years to help analyze the best stock options out there. Now, there is a process of applying AI against that platform to augment the investment analysts.
- “It’s allowing us to take our investment strategies to do more work against that platform and do do it faster.”
- “There are certainly going to be deep learning applications that have impacts, but I think AI’s impact is going to be much more in augmenting people or intelligence for many years not only from the financial services industry but for most of our day to day life.”
The Lightning Round — (38:30)
- Voice recognition software has been incredible and the progress of how it’s improved is making life easier for everyone with access.
- Advice for a first time CIO: “Surround yourself with the best people you can.”
- “I really think technology will have a positive impact on the world. There’s all this consternation about is it going to eliminate jobs, but throughout history it’s created more than its reduced.”